Fair Value Measurements of Financial Instruments: Audit Considerations

Overview

Covers the development of tests of controls and substantive tests for financial instruments.

Highlights

Key Topics

• Definition of financial instruments
• Planning considerations when auditing financial instruments
• Testing of financial instruments in audit
• Risk-based auditing and valuation of financial instruments

Prerequisites

None

Designed For

Who Will Benefit

• Practitioners and members in industry responsible for accounting and financial reporting

Objectives

Learning Outcomes

• Identify the significant risks and relevant assertions in assessing the risk of material misstatement of financial instruments included in the financial statements.
• Identify the key concepts of professional skepticism to the audit of financial instruments.
• Indicate whether it is appropriate to engage or rely on an employed valuation specialist during a financial statement audit that includes financial instruments.
• Identify key elements in understanding the entity that will assist in evaluating the appropriateness of the entity's segregation of duties and the effectiveness of management's valuation approach.
• Identify activities that can be performed by the internal audit function related to the valuation of and control procedures for financial instruments.
• Identify considerations management should apply when relying on third-party pricing specialists and other valuation specialists.
• Recall the audit requirements for assessing the appropriateness of impairment loses related to financial instruments and reasonableness of management's reported fair value measurement.